Overview – Background

The United States is unique with its 50 sovereign political entities, the states. Our Constitution provides us with an essential mechanism — federalism — to preserve and protect government by “We the People.” Each state has an executive, legislative and judicial branch; each state has the ability, independently, to raise revenues; each has the authority to make laws. All of this is subject to the consent of an electorate. The same citizens who elect presidents, senators, and representatives at the federal level also elect governors, state legislators and local officials. Those are the people who are most accountable and trusted to protect truly needy residents.

Welfare once was the province of the states, but increasingly has been treated as a federal responsibility. Since the 1960s, when the concept of public welfare radically expanded, federal micromanagement and redistribution of income has grown out of control. The federal government has spawned a vast array of redundant, overlapping and poorly targeted assistance programs. This bureaucratic monstrosity spends $724 billion a year to provide medical care, food, shelter and other basic services to a growing number of people who increasingly are not “needy” by any rational definition.⁶

Ronald Reagan understood the nature of government bureaucracies when he said:

The war on poverty created a great new upper-middle class of bureaucrats that found they had a fine career as long as they could keep enough needy people there to justify their existence.⁷

As Reagan recognized, the problem of welfare was not just expense but also dependency. The welfare bureaucracy had little if any incentive to boost people off of the federal rolls. Researcher Charles Murray later detailed the devastating impact of welfare on family and community in his book Losing Ground: American Social policy 1950-1980.

Elected governor of California in the midst of the Lyndon Johnson’s “Great Society,” Reagan became perhaps the most important advocate of genuine welfare reform. In doing so he had to battle Republicans as well as Democrats.

Bob Carleson, Reagan’s welfare adviser in both Sacramento and Washington, detailed the bipartisan pressure to expand the federal welfare system in the 1960s and 1970s:

“Welfare Reform”: That’s what Domestic Advisor Joe Califano labeled a comprehensive guaranteed income program that he presented to President Lyndon B. Johnson. Johnson rejected it. It was too big and too liberal.

But, when Richard Nixon became president he bought into substantially the same plan. … The proposal was known as the Family Assistance Plan, or FAP. FAP would be an efficient income redistribution system: universal, simple, and uniform. Like the Califano plan, the FAP proposal promised “a single equitable system,” “uniform national standards,” simplification of eligibility requirements,” and other panaceas pushed by the welfare establishment. These proposals were aimed not at welfare reforms based on need, but at an efficient system for the redistribution of income. …

[The plan] was killed in Senator Russell Long’s Finance Committee after Governor Reagan effectively testified against it on February 1, 1972. Reagan labeled FAP a national guaranteed income plan. He recommended State solutions as an alternative, based on his successful California welfare reforms.⁸

Reagan’s first reform principle was the most fundamental: “States are better equipped than the federal government to administer effective welfare reforms if they are given broad authority to utilize administrative and policy discretion.” However, after he was elected president he was unable to win congressional assent for welfare reform since Democrats still controlled the House.

Genuine change of the kind envisioned by Reagan and Carleson had to wait another decade until after Republicans took control of Congress. But one of the most important results of that electoral upheaval was the welfare reform legislation signed into law in 1996, which reversed 61 years of U.S. welfare policy by ending a recipient’s automatic entitlement to a cash welfare check. It was a good start, one on which Congress and the state legislatures can build a better future for millions of people still trapped by the incentives for dependency that remain in the remnants of the old welfare system.

The ’96 law was revolutionary. It literally repealed the entrenched economic incentive for states to encourage welfare dependence by eliminating the federal matching formula under Aid to Families with Dependent Children (AFDC) — which paid states up to 80 cents for every welfare dollar they spent. AFDC was replaced with a system of defined block grants to the states with few federal strings attached under the new Temporary Assistance to Needy Families (TANF) program. For the first time, states were given the ability to solve their welfare problems in their own way and taxpayers benefited because the block grants were capped at 1996 spending levels.

The ’96 legislation also provided the states with an important protection against federal encroachment. Section 417 states:

No officer or employee of the Federal Government may regulate the conduct of States under this part or enforce any provision of this part, except to the extent expressly provided in this part.⁹

Section 417 was included in the bill at the urging of those who anticipated efforts by then President Clinton and his Executive Branch department heads to “repeal” welfare reform by Executive Order or by regulatory fiat after the 1996 election was over.

As important as the TANF work requirements have been, transforming the open-ended AFDC entitlement program into a capped and stable block grant to the states in 1996 was THE structural change that enabled the powerful economic incentives that states needed to transform their welfare offices into work-promotion centers¹⁰ and gave the states opportunities to solve their welfare problems in their own way.

By NOT indexing the original block grant amounts, total annual federal spending on TANF has been reduced by 28 percent from 1997 to 2011 in real dollars, and is down by more than half of what it would have been under prior budget projections.¹¹

At the same time, increased work by former welfare dependents caused child poverty to decline every year, falling to levels that had not been seen since 1978. Under TANF, the welfare rolls dropped by nearly 65 percent to less than 2 million families — and from 12.2 million individuals in 1996 to 4.4 million in 2010.¹² Those are results that America can point to with pride.

As many commentators noted, including Ron Haskins at the Brookings Institution, by 2006, a decade after TANF’s passage, the number of families receiving cash welfare was the lowest it had been since 1969; the percentage of children on welfare was lower than it had been since 1966; and the percentage of children on AFDC/TANF was reduced from over 14 percent in 1994 to less than 5 percent in 2006. A true American success story.

As Haskins summed it up in his book on the subject:

[B]y 2000 the poverty rate of black children was the lowest it had ever been. The percentage of families in deep poverty, defined as half the poverty level…also declined until 2000, falling about 35% during the period.¹³

Unfortunately, advocates of expansive and expensive federal welfare programs never gave up. And the change in majorities in the House and Senate which took control in 2007, coupled with a new Administration taking office in 2009, marked the beginning of a concerted campaign to weaken the accomplishments of Welfare Reform. For the last few years, the federal government has been guided by a philosophy committed to increasing the number of Americans dependent on government. Like drug dealers handing out free samples in the schoolyard, the Obama administration’s policies have lured tens of millions of people onto the food stamp rolls, while loosening eligibility requirements for welfare programs across the board.

Provisions in the 2009 Stimulus bill undermined the ’96 Welfare Reform law, making it easier for states to increase cash welfare caseloads without having to meet federally mandated work requirements. Nevertheless, Section 417 was still largely operative until July 12, 2012 when the Obama administration issued an agency “Information Memorandum.” It allows states to waive ALL federal requirements for able-bodied welfare recipients to work, or prepare for work, in exchange for receiving assistance from American taxpayers. Not only did the Executive Branch lack the authority to waive the work requirements under the 1996 reform, but such executive action was explicitly, affirmatively, and legally prohibited by Section 417.¹⁴

The GAO in a legal opinion issued Sept. 4, 2012, concluded that the Obama administration had circumvented Congress because the HHS’ so-called “Information Memorandum constituted a rule under the provisions of the Congressional Review Act — and as such had to be submitted to Congress and the Comptroller General before it can legally take effect.¹⁵

At the same time, Food Stamps (now known officially as the Supplemental Nutrition Assistance Program — SNAP) have been turned into a stalking horse for a de facto national guaranteed income. Food Stamps are now being provided to more than 47 million Americans, 15 percent of the population. The program is primed for further expansion for two reasons:

1. It is the easiest low-income assistance program to expand because, unlike other welfare programs, it is funded with 100 percent federal money; and
2. Eligibility requirements are easily loosened by bureaucratic fiat without oversight from Congress.

Today, one in seven Americans receives Food Stamp benefits.¹⁶ This is a national disgrace.

Bob Carleson warned about this moment:

Consider what would happen next, if such an income redistribution mechanism were set in place. The political dynamics of representative democracy would accelerate the redistribution process. Irresistible pressures would build on Congress to increase the centrally-set benefit levels. Millions of additional persons would receive cash benefits. More pressure then would build for more benefits from a greater number of constituents. Additional benefits would be added, and on and on, until most Americans would be receiving cash benefits. Eventually, the nation’s economic system would collapse.”¹⁷

We are clearly at the tipping point that Carleson warned about, and the possibility of reining in the welfare state by tinkering with it here and there has long passed. The only way to stop the unbridled growth of government welfare dependence is to repeal and replace the current low-income assistance programs with finite block grants to the states — and permanently disconnect the Washington welfare bureaucracy from its hegemony over the nations’ welfare empire.

It is worth remembering Ronald Reagan’s testimony about welfare before the U.S. Senate Finance Committee in 1972 as California’s governor — more than 40 years ago:

Welfare needs a purpose — to provide for the needy, of course — but more than that, to salvage these our fellow citizens, to make them self-sustaining and as quickly as possible, independent of welfare. There has been something terribly wrong with a program that grows ever larger even when prosperity for everyone else is increasing.

We should measure welfare’s success by how many people leave welfare, not by how many more are added.¹⁸